Shareholders, sometimes called stockholders, are key to the success of many businesses in the United States, as their investments help the company grow. In return, shareholders are afforded several rights in the company as well as profit distributions for their investment. In many companies, the relationship between minority and majority shareholders is a fruitful one that helps the business flourish. However, in some cases, mismanagement or malicious actions can lead to shareholder disputes, such as ownership and governance disputes. Shareholder lawyers can help resolve these disputes and represent shareholders.
Governance disputes are complex matters, which can be challenging when navigating the imbalance between majority shareholders and minority shareholders. Since shareholders are entitled to a vote on key corporate matters, if they are denied this right, they may be able to pursue legal remedies. Skilled business shareholder lawyers understand both how company politics work as well as the legal standards and requirements for companies. This combination helps make shareholder lawyers an effective force for minority shareholders who have been denied their rights.
Speak with a skilled Florida shareholder attorney from Clearwater Business Law for a consultation. Call now at (727) 502-6874 to learn more about your legal rights.
Florida’s Shareholder Rights
There are generally two main types of shareholders in a company, majority shareholders and minority shareholders. A majority shareholder owns at least 50% of the company, whereas minority shareholders hold one share or more. More often than not, state law governs shareholder rights in each state. As such, some states may have more protection for shareholders than others. Florida state law provides that stockholders have the right to request company records of financial or legal details, the right to receive profit distributions when they are declared, and the right to vote on the board of directors. This final right, outlined here by the Florida Senate, is often most critical during ownership disputes. However, additional rights may be provided to shareholders by the company’s charter and bylaws.
Common Shareholder Disputes
To understand shareholder disputes and how to resolve them, it is vital to understand the causes and consequences of each relevant type. Governance and ownership disputes could negatively impact a company, possibly impacting the value of shares. Therefore, it is important to address shareholder disputes quickly and effectively. Fortunately, business shareholder lawyers are equipped to categorize and develop solutions to these disputes under Florida law. An attorney may be able to provide valuable insight into a dispute.
Breach of Fiduciary Duty
One of the primary reasons for a dispute among shareholders is breach of fiduciary duty. Shareholders, particularly majority shareholders and other controlling members of the board, have a responsibility to promote the profitability of the company. This precludes self-dealing and other unethical business practices that could harm the value of a company. However, Florida law may be more stringent than other states on what counts as a breach of fiduciary duty, according to the Florida Bar. Shareholder lawyers may be able to evaluate and identify breaches of fiduciary duty.
Schedule a consultation with a business attorney from Clearwater Business Law today to learn more about shareholder disputes.
Minority Shareholder Oppression
Another, more subtle type of unethical shareholder behavior may include minority shareholder oppression. This may occur when a majority shareholder attempts to wrest controlling power from minority shareholders to secure greater control for themselves. This may include compelling a shareholder to sell their shares at a low price, removing a shareholder from their position on the board, or engaging in transactions with other entities that are disadvantageous to the company. When a majority shareholder tries to manipulate minority shareholders into giving up their authority, this may cause a shareholder dispute.
Company Governance
Florida shareholders also have a right to vote on the board of directors and occasionally other officials. Disagreements over how this process should occur and disputes over choices made could lead to legal action. Shareholders have a right to voice their opinions and desires in a vote for company governance, and neglect of this fact could cause dissension. However, it is important to understand whether the actions of the majority shareholders are in violation of Florida statutes. This is one area that a business shareholder lawyer can help.
Valuation Disagreements
Additionally, shareholders may dispute the valuation of their shares in the company. The stock market is in constant fluctuation due to the rise and fall of national and international corporations. This means that the individual stocks of a company owned by the shareholders often do not have a fixed value. When payouts to shareholders are in order or when selling or purchasing stock, some shareholders may dispute the purported value of their stock. In these cases, a financial advisor or appraiser may be called in to validate their claims.
Advantages of Business Shareholder Lawyers
Business shareholder lawyers often have extensive experience in both company politics and business law. This means that shareholder lawyers can accurately assess issues in a company and evaluate them against legal standards. Just as corporate landscapes are constantly shifting, so are legal policies and expectations. An attorney can provide accurate and current information on legal trends and regulations for businesses in Florida. A skilled business attorney may also have experience mediating disputes and finding amicable solutions for governance disputes.
However, if shareholder rights are violated and mediation is either impossible or unfruitful, a skilled attorney can help represent their client in court and other negotiations. A business litigation case often requires extensive evidence and research to prove fault and secure relief for the offended party. This process can be demanding and overwhelming, often requiring a high level of legal knowledge and experience. Shareholder lawyers can help address these issues for their clients.
Our Florida Shareholder Lawyers Can Help
Governance disputes can be incredibly serious, especially for minority shareholders who have invested significantly in a company. When majority shareholders fail to respect the rights of other shareholders, they could deprive them of financial gain and damage their investments. This is why many Florida shareholders rely on the experience and expertise of the shareholder lawyers from Clearwater Business Law. Consider scheduling a consultation with a Florida business lawyer to discuss your legal rights as a shareholder. Call the office today at (727) 502-6874 for more details.